What’s going to happen to mortgage rates in 2016? Lots of people, very smart people try to anticipate what is coming. We are well aware that they don’t always get it right, but the more we know the better prepared we can be. Loan Rates Have Been Crazy! A quick look at Freddie Mac’s history reveals that it has been more than five years since monthly average rates for 30-year fixed-rate mortgages (FRMs) topped 5 percent. At one point, at the end of 2012, they reached an all-time low of 3.35 percent. Right now they are still very close to that 3.35 percent and have yet to hit 4. How quickly these low rates have become the norm! But don’t forget what normal used to be. If you look back over the decade before the housing and lending crisis really hit in 2008, the average annual rate for a fixed rate mortgage was over 6 percent for seven of the 10 years. In 2000, it was 8.05 percent. That sounds bad, but once again….remember the 80’s….. In 1981, the annual percentage rate average was more than twice that at 16.63 percent. Interest rates were above 10 percent from 1979 – 1990. Don’t let those rates scare you. I have yet to find an economist that expects mortgage rates to rise to those levels again anytime in the near future. So When Will “Normal” Return? There are just too many variables to predict that with any accuracy at this point. The election, oil prices, stock activity and so much more can all make an impact and none of which at this point can accurately be predicted into the far future. What Experts Forecast for 2016 Fannie Mae and the Mortgage Bankers Association (MBA) both have teams of economists dedicated to researching and forecasting trends in housing, including current mortgage rates.(Thank goodness for them…that means we can listen to what they say rather than doing our own research!) The MBA team expects average rates for 30-year fixed rate mortgage to hit 5.1 percent in the last quarter of 2016. It anticipates fairly small increases through 2016’s quarters: Q1 4.4 percent; Q2 4.7 percent; Q3 4.9 percent; Q4 5.1 percent. Fannie Mae however forecasts much smaller rises in current mortgage rates with forecasts much smaller and shallower rises, with only 4.2 percent in the last quarter of 2016. Q1, 4.1 percent in Q2 and 4.2 percent in both Q3 and Q4. So Who’s Right? So we know that both of these research teams are incredibly intelligent and the fact is either could be right (or both could be wrong). Even the Federal Reserve will not confidently predict when its own rates will rise, and it sets those itself. Most experts and economists currently expect to see some rises between now and the end of 2016. However, a few reckon it could be a long time before we get back to normal levels. One, Deutsche Bank equity strategist David Bianco, wrote in early October, “We see a better chance of landing men on Mars before a full normalization of nominal and real interest rates, especially 10-year yields, to historical norms.” What to Watch For Usually, good economic data causes rates to rise, while poor numbers pull the rates down. In particular, low unemployment and inflation at around 2 percent are important, because those are the main criteria the Fed looks at when setting its rates. But good numbers regarding gross domestic product (GDP), incomes, manufacturing, consumer confidence and spending, and so on are all likely to see rates rise sooner and faster. Poor ones generally have the opposite effect, as does bad news about foreign economies. What happened in Greece this past year definitely helped to keep our rates low! What’s going to happen to current mortgage rates in 2016? The short answer is nobody can be sure. If you’re reading this because you need to make an important decision (time the purchase of a home, perhaps, or decide when to refinance an adjustable rate mortgage, we haven’t been much help. However we have given you the signs to watch for! Rates now are still low so it is a great time to buy a home and lock yourself in at those low fixed rates. The team at Foran Realty would be happy to help you with your home search needs on Cape Cod. https://www.lendingtree.com/mortgage-rates/mortgage-rates-what-to-expect-in-2016-article ]]>
Have a checklist Whether you are a 1st-time buyer or an experienced owner, buying a house requires a “preflight check,” in the words of Barry Zigas, director of housing policy for the Consumer Federation of America. Read on for a checklist provided by Bankrate, including tips on the types of savings you need, plus advice about what matters beyond purchasing a home at its resale value. And if you’re already ready to shop for a mortgage, find the best deal today by talking to your local lenders, mortgage brokers and researching online. Strengthen Your Credit Score “It’s a brave, new world with respect to credit requirements for mortgages,” says John Ulzheimer, credit expert and contributor at CreditSesame. One old rule still applies: The higher your credit score, the lower your monthly payments. “Below 660 or 680, you’re either going to have to pay sizable fees or a higher down payment,” Zigas says. And that’s pretty much the cutoff score for getting a mortgage, he says.
Higher scores wantedVicki Bott, a former official at the U.S. Department of Housing and Urban Development, says that her office noticed much the same thing. “While there are many qualified borrowers in the 580 range, the market today is probably looking for 640 to 660, at a minimum.” On the other end, a score of 700 to 720 will get you a good deal, and 750 and above will garner the best rates on the market. Improve your chances by: pulling your credit reports and ensuring you’re not being unfairly penalized for old, paid or settled debts, Zigas says. Stop applying for new credit a year before you apply for your mortgage. And keep that same policy in place until after you close on your home. A change in your score right before closing could adversely affect your mortgage approval. Figure Out What You Can Afford The buyer’s mantra should be: Get a home that’s financially comfortable. There are various rules of thumb that will help you get an idea of how much home you can afford.
Realistic debt-to-income ratioFor conventional loans, a safe formula is that home expenses should not exceed 28 percent of your gross monthly income, says Susan Tiffany, director of personal finance information for adults for the Credit Union National Association. Improve your chances by: trying on that financial obligation long before you sign the mortgage papers, says Tiffany. Before you home shop calculate the mortgage payment (there are several online calculators available) for the home in your intended price range, along with the increased expenses (such as taxes, insurance and utilities). Then bank the difference between that and what you’re paying now. Not only does it allow you to build a nice nest egg, but it gives you a feel for the comfort level in those payments. Once you have submitted your formal mortgage application, limit your spending to what is absolutely necessary. Do not make any substantial purchases and this could put your mortgage approval in jeopardy. Save for Down Payment and Closing Costs Depending on your credit and financing, you’ll typically need to save enough money for a down payment, somewhere between 3 percent and 20 percent of the home’s price.
Don’t forget loan feesAnother substantial cash expense is your closing costs. Whatever your loan source, you’ll also need money to pay closing costs. For a $200,000 mortgage, closing costs run (depending on where you live) from $2,300 to $4,000. In a buyer’s market, you can also try to negotiate to have the seller pay a portion of the closing costs. Build a Healthy Savings Account Building your savings is something you should do over and above saving money for the down payment and closing. Your lender wants to see that you’re not living paycheck to paycheck. If you have 3 to 5 months’ worth of mortgage payments set aside, that makes you a much better loan candidate. That money will also help cover maintenance and repair issues that come up when you own a home. While repairs are sporadic, items such as a new roof, water heater or other big-ticket items can hit suddenly and hard. Get Preapproved for Your Mortgage For serious home shoppers, “the No. 1 thing is they better have everything in order,” says Dick Gaylord, broker with Re/Max Real Estate Specialists in Long Beach, California, and former president of the National Association of Realtors. That means that before the real home shopping begins; you want to be sure that you have your financing in place. The preapproval process is “much more extensive” than it was a few years ago, he says. Buy a House You Like If you’re buying today for yourself and your family, you want a home that will make you happy for the next few years. Gone are the days when you could count on a quick sale, Tiffany says. And depending on how much you put down, and how much you have to shell out to sell and relocate, short-term ownership can be a pretty expensive proposition. Information gathered from and more information available at: http://www.bankrate.com/finance/mortgages/]]>
Join Our Team! Foran Realty is Cape Cod’s Premiere Independently Owned Real Estate Firm. Our firm specializes in Residential and Commercial Sales, Vacation Rentals and Property Management in the Mid and Lower Cape regions. We are currently looking to add select Professionals to our Team, and would love the opportunity to learn more about you! Founded in 2005 by Patrick Foran on the premise of delivering “old fashioned customer service”, combined with today’s modern technology creating the ultimate experience for our customers, our growth has been consistently strong. In 2015, Peter McDowell Associates of Dennis, MA merged with Foran Realty, and in 2016 Dubin Associates of East Dennis also joined forces with Foran Realty. Both McDowell Associates and Dubin Associates have deep roots in the mid-Cape Real Estate community and recognized the value Foran Realty brought to its Clients and both Principals wanted to become part of our exciting future. Patrick works with each agent in the office to help them achieve their individual goals. Our Client centric culture removes competition from our office, and all of our agents work together and help each other succeed in our colloquial work environment. We are currently looking to add a few select professionals to our Team. We are most selective in who we bring onto our Team, as we want to be certain our culture and Client focus remain intact. Unlike other real estate firms (especially the franchises and “box” firms), we do not hire everyone who walks through our door! Our agents must be Client focused, self-starting, tech savvy, able to resolve problems and satisfactorily address challenges, and also be a “people person” who loves his or her career and interacting with people. Foran Realty offers an attractive compensation package, with no hidden fees. Foran Realty also offers a great referral program to select licensed agents who do not want to be involved in day to day business activities, but still want to earn commissions. We offer progressive commission splits, free office space and each agent has access to a computer. We also provide the most up to date professional training and office technology. If you feel your experience, talent and vision match our Culture of Excellence and you are considering a change for self-improvement and desire the opportunity to become an integral part of a locally owned growing firm, please forward a letter of introduction along with your resume to Hiring Manager. All submissions will be held in strict confidence. You can also apply by clicking the link below and watching the video or copy and paste the following into your browser: http://accurecruiter.com/Candidates/Application.aspx?o=10308&j=61&jr=61 Learn a little bit about us, while we learn a little bit about you.
- Save your pennies.You’ll need to come up with cash for your down payment and closing costs. Lenders usually like to see a minimum 20% of the home’s price as a down payment. If you can put down more than that, the lender may be willing to approve a larger loan or provide you with a better interest rate. If you have less, there are various private and public agencies — including Fannie Mae, Freddie Mac, the Federal Housing Administration and the Department of Veterans Affairs that will provide low down payment mortgages through banks and mortgage companies. If you qualify, it’s possible to pay as little as 3% up front. Once you’ve considered the down payment, make sure you’ve got enough to cover fees and closing costs. These may include the appraisal fee, loan fees, attorney’s fees, inspection fees, and the cost of a title search. They can easily add up to $5,000 to $10,000 — and often run to 5% of the mortgage amount.
- Find an agent: Mostsellers will list their homes for sale through an agent. But be aware that those agents work for the seller, not you. You need a buyer’s agent. Get in touch with a Real Estate Agent that you are comfortable with and that can help you find the home that is best for your personal situation. A buyer’s agent has the same access to homes for sale that a seller’s agent does, but their loyalty lays with you not the seller. The agents at Foran Realty are always ready, willing and able to represent you as a buyer’s agent.
- Search for a home. Your first step here is to figure out what city or neighborhood you want to live in. Try also to get an idea about the real estate market in the area. For example, if homes are selling close to or even above the asking price, that indicates a desirable area. Consider house hunting in the off-season or during the colder months of the year. You’ll have less competition and sellers may be more willing to negotiate
- Make an offer. Once you find the house you want, it is time to make your bid. When working with a buyer’s broker, get advice from him or her on an initial offer. Try to line up comparable data on at least three houses that have sold recently in the area. If you really want the house, don’t lowball the offer. The seller may give up in disgust. Remember, that your leverage depends on the pace of the market. In a slow market, you’ve got muscle; in a hot market, you may have none at all. Once you reach an agreed upon price, the seller’s agent will draw up an offer to purchase that includes an estimated closing date (usually 45 to 60 days from acceptance of the offer).
- Enter contract. Have your buyer’s agent review this document to make sure the deal is contingent upon:
- Your obtaining a mortgage
- A home inspection that shows no significant defects
- A guarantee that you may conduct a walk-through inspection.
- Secure a loan.Now call your mortgage broker or lender and submit your formal mortgage application. Be sure to include the information from your preapproval as you want the process to be as streamlined as possible.
- Get an inspection: In addition to the appraisal that the mortgage lender will make of your home, you should hire your own home inspector. An inspection costs about $300, on average, and could cost up to $1,000. Be sure that you ask to be there during the inspection. This will allow you to learn a lot about your house. If the inspector turns up major problems, like a roof that needs to be replaced, then ask your buyer’s agent to discuss it with the seller. You will either want the seller to fix the problem before you move in, or deduct the cost of the repair from the final price. If the seller won’t agree to either remedy you may decide to walk away from the deal, which you can do without penalty as long as you have that contingency written into the contract.
- Close the deal. About a week before the actual closing, you will receive a Closing Statement from your lender that lists all the charges you can expect to pay at closing. Review it carefully as it will detail all of the closing costs you will be required to pay at the closing. It should also detail all expenses that you have already paid including inspections, application fees etc. The actual closing is somewhat anticlimactic, but your buyer’s agent can brief you on the particulars.
Resolution #1: Figure Out What You Want This is the fun part! You need to decide what, where, and when! What style house are you looking for, how big, how many bedrooms, bathrooms etc.? Do you want a wooded lot, an open lot? Take your time with these decisions as buying a home is a major commitment and you want to be somewhere you can live happily for several years! Resolution #2: Get Your Finances Ready Once you have an idea of what you are looking for it’s time to determine what you can afford. How much do you have available for a down payment? What is your monthly budget for a mortgage payment? Do you have money for closing costs and taxes? You should start the mortgage process before bidding on a home. Meet with your local lenders and determine not only which program best suits you and your needs but how much you can qualify for. Resolution #3: Get Your Pre-Approval “Pre-approval” means you have met with a loan officer, your credit files have been reviewed and the loan officer qualifies you for a given loan amount with one or more specific mortgage programs. The lender will provide you with a pre-approval letter, which shows your borrowing power. You can visit as many lenders as you like and get several pre-approvals, but keep in mind that each one carries with it a new credit check, which will show up on future credit reports and could damage your credit score. The more inquiries you have the lower your score goes. We recommend you work with a local lender as they have the best knowledge of the local market. Resolution #4: Find Your Realtor or Real Estate Agent: Most sellers will list their homes for sale through an agent. But be aware that those agents work for the seller, not you. You need a buyer’s agent. Get in touch with a Real Estate Agent that you are comfortable with and that can help you find the home that is best for your personal situation. A buyer’s agent has the same access to homes for sale that a seller’s agent does, but their loyalty lays with you not the seller. We are partial to the folks at Foran Realty, give them a call at 508-385-1355 or shoot them an email at firstname.lastname@example.org and you will be in great hands! Resolution #5: Find Your New Home Now we are back into the fun stuff. A home is more than just a collection of bedrooms and bathrooms. Several properties with similar amenities may very well represent completely different designs, commuting distances, lot sizes, tax costs, interior dimensions, and exterior finishes. Here’s where the information you gathered in Resolution #1 comes into play. You already know what you want. Resolution #6: Make An Offer Once you find the house you want, it is time to make your offer. When working with a buyer’s broker, get advice from him or her on an initial offer. Try to line up comparable data on at least three houses that have sold recently in the area. If you really want the house, don’t lowball the offer. The seller may give up in disgust. Remember, that your leverage depends on the pace of the market. In a slow market, you’ve got muscle; in a hot market, you may have none at all. Once it is time to formally make your offer don’t forget about your contingencies. Typically we see Mortgage, Inspection and Title V as “standard” contingencies. Other types of things could be the inclusion of furniture, appliances or just about anything else. You also need to make a good-faith deposit — usually 1% to 10% of the purchase price — that will be deposited into an escrow account of the listing agent’s broker. The seller will receive this money after the deal has closed. If the deal falls through, you will get the money back only if you or the home failed any of the contingency clauses. For planning purposes you should have your home inspections completed within 2 weeks of the accepted offer and before you sign the purchase and sale. Plan on closing at least 30 – 45 days from the signing of the P&S. On October 3, 2015 new closing regulations came into effect. Collectively these are known as “TRID”. Under TRID the process has changed and the length of time to close has extended. Your agent and mortgage officer should be well versed in this and be able to walk you through the process to ensure a smooth and on time closing. Resolution #7: Understand Your Mortgage Options Now call your mortgage broker or lender and submit your formal mortgage application. Be sure to include the information from your preapproval as you want the process to be as streamlined as possible. Resolution #9: Close On Your New Home At three days before the actual closing, you will receive a final Closing Document (CD) from your lender that lists all the charges you can expect to pay at closing. Review it carefully as it will detail all of the closing costs you will be required to pay at the closing. It should also detail all expenses that you have already paid including inspections, application fees etc. The actual closing is somewhat anticlimactic, but your buyer’s agent can brief you on the particulars. Resolution #10: Tie Up Loose Ends You’ve done it. You’ve looked at properties, made an offer, obtained financing and gone to closing. What’s next? Those papers you received at settlement are extremely valuable, so hold on to them! Also at closing, determine the status of the utilities required by the home, items such as water, sewage, gas, electric and oil service. You want utility bills to be paid in full by owners as of closing and you also want services transferred to your name for billing. Usually such transfers can be done without turning off any of the utilities and should be done prior to closing. When you move in, you may want to replace all of the locks just to be safe. Finally and most importantly……Enjoy your home!!!! Owning real estate involves contracts, loans, and taxes, but ultimately what’s most important is that home ownership should be a wonderful experience! The Experts at Foran Realty are ready to assist you with all of your needs, whether it be as a selling agent or a buyer’s agent we are just a phone call away! ]]>
Owning a house gives you a sense of fulfillment, and helps boost your self-esteem. It is a long term investment and should not be taken lightly. The present state of your finances is possibly the single most important factor when contemplating home ownership. Before you start shopping for a house, take into consideration the following factors. Have you set aside enough money for the down payment? The amount you need varies based on the price of the home and percentage required by your lender. Zero down mortgages are possible, however the interest rate is typically very high increasing the amount paid out over the life of the loan. Private Mortgage Insurance (PMI) is typically required for this type of loan, again increasing your monthly payment. How high of a mortgage payment can you afford to make ? If you opt for a fixed rate, your payment would remain consistent throughout the period of the loan. This type of loan is favorable for future financial planning. Adjustable rate mortgages make it a bit trickier to predict your monthly payments based on the fluctuating interest rate throughout the duration of the loan. This type of loan could be risky if interest rates rise and your payments increase significantly higher than anticipated. The security of your financial future is paramount when acquiring a mortgage loan. You would not want to enter into this long term investment without stable employment and a definite career path. Most banks and lending companies require a borrower to have been with the same employer for at least 2 years before considering a loan of this nature. Secure financial footing is key when applying for a mortgage loan. When determining your readiness to purchase a home, your credit score is as important as your finances. If you have a low credit score, you’ll attract a higher lending rate. This implies an increase in the amount paid back to the lender over the duration of the loan. An excellent credit score of 720 or above attracts the best interest rates and repayment terms. If your credit score is too low, improve it by:
- Becoming Debt Free
- Removing all inaccuracies from your credit report
- Making all monthly payments in a timely manner — eliminating late payments
- Avoid applying for new loans and opening credit accounts